WASHINGTON, (Pakistan Point News - APP - 28th july, 2016) - An independent probe into the IMF's handling of European bailouts found that it bent its rules and was vulnerable to political pressure as it embarked on the ill-fated 2010 Greece rescue. The International Monetary Fund's Independent Evaluation Office said in its report Thursday that in the plunge into the eurozone crisis, the Fund's executive board was poorly informed and exercised too little oversight over decisions which taxed the Fund's resources.
And it suggested that, led by and operating too closely with Europeans, the Fund underestimated the risks in the European economy and overestimated the region's ability to handle any problems. The IEO report bluntly criticized the rush by the Fund's management, led former French finance minister Dominique Strauss-Kahn up to May 2011, to join the European Central Bank and European Commission in the crisis bailouts of Greece, Ireland and Portugal.
It questioned whether the Fund had sacrificed its independence and ability to clearly assess the situation in Europe after joining the bailout "Troika" with the ECB and EC. The Fund too readily accepted the ECB and EC decision to not restructure Greece's massive debt, which would have lightened Athens' financial burden, before embarking on the first 110 billion euro bailout. "The IMF was kept on the sidelines in late 2009 and early 2010 when approaches to dealing with the developing crisis in Greece were being debated in Europe," the report said.
"By the time the IMF was invited to provide its expertise and financing in late March 2010, the option of debt restructuring at the program's outset was off the table." Debt restructuring was later required after the first bailout program failed, and even now, the IMF is demanding its European partners reduce Greece's debt load if it is to join the third rescue program.